Occidental Petroleum reports Q4 loss but maintains strong operational cash flow

Overview

Occidental Petroleum (OXY) reported a net loss of $297m ($0.32 per diluted share) in Q4 2024, largely driven by a $1.1bn environmental liability charge following a federal court ruling, which the company is appealing. Despite this, adjusted income was $792m ($0.80 per diluted share), reflecting strong operational performance. The company exceeded production guidance, maintained steady cash flow, and continued debt reduction efforts, positioning itself for long-term sustainability.

President and CEO Vicki Hollub stated: “Our teams continued to demonstrate industry-leading performance during the fourth quarter of 2024, outperforming guidance across all three segments and delivering record U.S. production while improving our capital efficiency.”

Q4 2024 vs. Q4 2023:

• Total revenue declined to $6.76bn (-5.7% YoY), due to lower oil prices.
• Operating cash flow recorded a value of $3.56bn (+10% YoY), supported by cost efficiencies.
• Free cash flow (before working capital) was $1.4bn (+27% YoY), ensuring a good liquidity.
• Adjusted net income increased to $792m (+11.5% YoY), with adjusted diluted EPS of $0.80 (vs. $0.72 in Q4 2023).
• Production for the Q4 was 1,463 Mboed, exceeding guidance by 13 Mboed.
• For the Oil & Gas segment, Pre-tax income was $1.2bn (flat QoQ), with production reaching 1,463 Mboed, led by Permian and Rockies regions. Crude oil prices fell 7% QoQ to $69.73 per barrel, while natural gas prices surged 215% QoQ to $1.26 per Mcf, benefiting from winter demand.
• For Chemical segment, Pre-tax income was $270m (-8% QoQ), impacted by lower PVC pricing and seasonal demand declines. Favorable commercial contracts helped offset pricing pressures.
• For Midstream & Marketing segment, Pre-tax loss was $134m, including $88m in net derivative losses. WES equity investment income contributed $142m, supporting cash flow stability.

Full-Year 2024 highlights:

• Total revenue recorded a value of $26.73bn (-5.4% YoY), reflecting again lower oil prices.
• Net income decreased to $2.38bn (-37% YoY), impacted by higher costs and litigation expenses.
• Adjusted net income also declined to a value of $3.37bn (-6% YoY), with adjusted diluted EPS of $3.46 (vs. $3.70 in 2023).
• Total production was 1,327 Mboed (+8.5% YoY), driven by higher Permian and Rockies output.
• The company repaid $4.5bn worth of debt, reinforcing balance sheet strength. Also, Occidental announced $1.2bn in asset sales for Q1 2025.

Occidental Petroleum anticipates steady growth in 2025, maintaining a balanced approach between capital discipline, production expansion, and shareholder returns. The company projects capital expenditures of $6.0bn – $6.5bn, prioritizing Permian Basin development and carbon management initiatives. Production is expected to range between 1,450 – 1,500 Mboed, with continued growth in U.S. shale operations. Free cash flow is expected to remain strong, providing liquidity for strategic stock buybacks and ongoing debt reduction. Reinforcing its commitment to shareholder value, Occidental increased its dividend by 9% to $0.24 per share and announced an additional share repurchase program, underscoring confidence in its long-term financial outlook.

One day after the results were released, OXY’s share price appreciated by about +4%, but in terms of the last year, the company’s shares are still trading at a price that is down by more than -14%. The rise on February 19th came rather on the background of the increase in the holding of shares of Occidental Petroleum by the company Berkshire Hathaway, owned by Warren Buffet, which purchased 763,000 OXY shares earlier this month, and now Buffett’s stake in Occidental Petroleum is 28.3%.

Author: Ionuț-Adrian Lazar